Formation and maintenance of the normal vasculature is dependent on interactions between several agonists and inhibitors of angiogenesis. There is strong evidence that two key endogenous molecules with opposing effects on angiogenesis are critical in maintaining the structural and functional integrity of blood vessels in the body. These are the well-characterized proteins, vascular endothelial derived growth factor (VEGF) and pigment epithelium-derived factor (PEDF). Overexpression of VEGF, a potent endothelial cell mitogen, is potentiated in response to hypoxia, hyperglycemia, and chronic inflammation to generate pathological angiogenesis. At nonphysiological levels, VEGF transmits increased proangiogenic signals by binding to its receptors on endothelial cells, which, in turn, activates discrete molecular pathways that perturb endothelial cell proliferation, adhesion, migration, tight junction formation, and vascular permeability. PEDF, on the other hand blocks endothelial cell proliferation and migration and in so doing checks the excessive actions of VEGF on blood vessel growth. Both of these molecules are found in a state of equilibrium in the eye, which is essential to maintain healthy retinal vasculature. Disruption in the function or syn thesis of these factors by environmental stresses can con tribute to vessel abnormalities. In diabetic retinopathy, formation of microvascular lesions is a hallmark event in the development and progression of the disease. Disturbances in the levels of VEGF and PEDF have been noted in this condition in experimental and clinical findings. This chapter highlights recent developments that have widened our understanding of how modulations in expression levels of these opposing angiogenesis factors may exacerbate diabetic retinopathy, the need for better surveillance that would identify early disturbances in their synthesis and secretion in the diabetic retina, and the importance of developing treatments to restore physiological levels of both molecules in the prevention of diabetic retinopathy.